Exhibit
10.1


 


COHERENT, INC.


 


2005 DEFERRED COMPENSATION PLAN


 

















 


PREAMBLE


 


This Coherent, Inc.
2005 Deferred Compensation Plan is adopted by Coherent, Inc. for the
benefit of certain of its Employees and members of its Board of Directors,
effective as of January 1, 2005 (the “Effective Date”).  The purpose of the Plan is to provide
supplemental retirement income and to permit eligible Participants the option
to defer receipt of Compensation, pursuant to the terms of the Plan.  The Plan is intended to be an unfunded
deferred compensation plan maintained for the benefit of a select group of
management or highly compensated employees under sections 201(2), 301(a)(3) and
401(a)(1) of ERISA and is intended to comply with Section 409A of the
Internal Revenue Code.  Participants
shall have the status of unsecured creditors of Coherent, Inc. with
respect to the payment of Plan benefits.


 


From and after the
Effective Date, this Plan replaces the Coherent, Inc. 1995 Deferred
Compensation Plan, the Coherent, Inc. Supplementary Retirement Plan and
the Director Deferred Compensation Plan, which have been frozen to new
deferrals as of December 31, 2004 so as to qualify these prior plans for “grandfather”
treatment under Internal Revenue Code Section 409A.


 

















 


TABLE OF CONTENTS


 


	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE
  I Definitions

  	
  1

  
	
   

  	
   

  
	
  1.1

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  II Participation

  	
  4

  
	
   

  	
   

  
	
  2.1

  	
  Date
  of Participation

  	
  4

  
	
  2.2

  	
  Resumption
  of Participation Following Return to Service

  	
  4

  
	
  2.3

  	
  Change
  in Employment Status

  	
  5

  
	
   

  	
   

  	
   

  
	
  ARTICLE III  Contributions

  	
  5

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Deferral
  Contributions

  	
  5

  
	
  3.2

  	
  Accounts

  	
  6

  
	
  3.3

  	
  Company
  Contributions

  	
  7

  
	
  3.4

  	
  Cancellation
  of Elections Due to 401(k) Hardship Withdrawal or Unforeseeable
  Emergency Distribution

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IV Participants’ Accounts

  	
  8

  
	
   

  	
   

  
	
  4.1

  	
  Individual
  Accounts

  	
  8

  
	
  4.2

  	
  Accounting
  for Distributions

  	
  8

  
	
  4.3

  	
  Separate
  Accounts

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  V Investment of Contributions

  	
  8

  
	
   

  	
   

  
	
  5.1

  	
  Manner
  of Investment

  	
  8

  
	
  5.2

  	
  Investment
  Decisions

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VI Distributions

  	
  9

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Certain
  Distributions to Participants and Beneficiaries

  	
  9

  
	
  6.2

  	
  Subsequent
  Election to Delay or Change Form of Payment

  	
  10

  
	
  6.3

  	
  Lump-Sum
  Distribution Timing

  	
  11

  
	
  6.4

  	
  Installment
  Amounts

  	
  11

  
	
  6.5

  	
  Unforeseeable
  Emergency Distributions

  	
  11

  
	
  6.6

  	
  Scheduled
  In-Service Distribution

  	
  11

  
	
  6.7

  	
  Death

  	
  12

  
	
  6.8

  	
  Notice
  to Trustee

  	
  13

  
	
  6.9

  	
  Time
  of Distribution

  	
  13

  
	
  6.10

  	
  Limitation
  on Distributions to Covered Employees Prior to a Change of Control

  	
  13

  
	
  6.11

  	
  Domestic
  Relations Order Distributions

  	
  13

  
	
  6.12

  	
  Conflicts
  of Interest and Ethics Rules Distributions

  	
  13

  
	
  6.13

  	
  FICA
  and Related Income Tax Distribution

  	
  13

  



 


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TABLE OF CONTENTS


 


	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  6.14

  	
  State,
  Local and Foreign Tax Distribution

  	
  13

  
	
  6.15

  	
  Code
  Section 409A Distribution

  	
  14

  
	
  6.16

  	
  Tax
  Withholding

  	
  14

  
	
  6.17

  	
  Special
  2008 Election

  	
  14

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VII Change of Control

  	
  14

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  No New
  Participants Following Change of Control

  	
  14

  
	
  7.2

  	
  Discretionary
  Termination and Accelerated Plan Distributions 30 Days Prior to or Within 12
  Months Following a Change in Control

  	
  14

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VIII Termination Due to Corporate Dissolution or Pursuant to Bankruptcy Court
  Approval

  	
  14

  
	
   

  	
   

  
	
  8.1

  	
  Corporate
  Dissolution

  	
  14

  
	
  8.2

  	
  Bankruptcy
  Court Approval

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IX Amendment and Termination

  	
  15

  
	
   

  	
   

  
	
  9.1

  	
  Amendment
  by Employer

  	
  15

  
	
  9.2

  	
  Retroactive
  Amendments

  	
  15

  
	
  9.3

  	
  Plan
  Deferral Termination

  	
  15

  
	
  9.4

  	
  Distribution
  upon Certain Plan Terminations

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  X The Trust

  	
  15

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  Establishment
  of Trust

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XI Miscellaneous

  	
  16

  
	
   

  	
   

  
	
  11.1

  	
  Limitation
  of Rights

  	
  16

  
	
  11.2

  	
  Nontransferability;
  Domestic Relations Orders

  	
  16

  
	
  11.3

  	
  Facility
  of Payment

  	
  16

  
	
  11.4

  	
  Information
  between Employer and Trustee

  	
  16

  
	
  11.5

  	
  Notices

  	
  16

  
	
  11.6

  	
  Governing
  Law

  	
  17

  
	
  11.7

  	
  No
  Guarantees Regarding Tax Treatment; Disclaimer

  	
  17

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XII Plan Administration

  	
  17

  
	
   

  	
   

  	
   

  
	
  12.1

  	
  Powers
  and responsibilities of the Administrator

  	
  17

  
	
  12.2

  	
  Nondiscriminatory
  Exercise of Authority

  	
  18

  
	
  12.3

  	
  Claims
  and Review Procedures

  	
  18

  
	
  12.4

  	
  Exhaustion
  of Claims Procedure and Right to Bring Legal Claim

  	
  21

  
	
  12.5

  	
  Plan’s Administrative Costs

  	
  21

  



 


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ARTICLE I


 


Definitions


 


1.1           Definitions.  Wherever used herein, the following terms have
the meanings set forth below, unless a different meaning is clearly required by
the context:


 


(a)           “Account” means an account established on the
books of the Employer for the purpose of recording amounts credited on behalf
of a Participant and any expenses, gains or losses included thereon.


 


(b)           “Administrator” means the Employer, or the
Committee, if one has been designated by such Employer.


 


(c)           “Bankruptcy Court Approval” means the approval
of a bankruptcy court pursuant to 11 U.S.C. § 503(b)(1)(A).


 


(d)           “Beneficiary” means the person or persons
entitled under Section 6.7 to receive benefits under the Plan upon the
death of a Participant.


 


(e)           “Change of Control Event” means a change in
ownership or effective control of the Company or in the ownership of a
substantial portion of the Company’s assets, as defined under Code Section 409A.


 


(f)            “Code” means the Internal Revenue Code of 1986,
as amended from time to time.


 


(g)           “Code Section 409A” means Code Section 409A
and the proposed or final (as applicable) Treasury regulations and other
official guidance promulgated thereunder.


 


(h)           “Code Section 409A Distribution” means a
distribution pursuant to Section 6.15 hereof.


 


(i)            “Committee” means the Deferred Compensation
Committee composed of three or more individuals appointed by the Compensation
Committee of the Board of Directors of the Employer, or following a Change of
Control, appointed by the Committee, to function as the Administrator.  Once appointed, the Deferred Compensation
Committee shall interpret and administer this Plan and take such other actions
as may be specified herein.


 


(j)            “Company” means the Employer and any of its
Subsidiaries.


 


(k)           “Compensation” means (i) with respect to
Eligible Employees, base salary, commissions, variable compensation plan
bonuses, and, to the extent that they qualify as Sales Commissions under Code Section 409A,
sales commission plan bonuses and sales incentive bonuses, including amounts
that are otherwise excludable from the gross income of the Participant


 


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under a salary reduction
agreement by reason of the application of Sections 125 or 402(a)(8) of the
Code, and (ii) with respect to Outside Directors, all cash retainers and
cash meeting fees, excluding expense reimbursements.  Compensation does not include any severance
payments or benefits.


 


(l)            “Corporate Dissolution” means a dissolution of
the Company that is taxed under Code Section 331.


 


(m)          “Deferral Contributions” means, for each
Participant, the amount deferred pursuant to Section 3.1 hereof.


 


(n)           “Disability” means the Participant (i) is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than
twelve (12) months, or (ii) is, by reason of any medically determinable
physical or mental impairment which can be expected to last for a continuous
period of not less than twelve (12) months, receiving income replacement
benefits for a period of not less than three (3) months under an accident
and health plan covering Company employees.


 


(o)           “Domestic Relations Order” means a court order
that qualifies as a domestic relations order under Code Section 414(p)(1)(B).


 


(p)           “Eligible Participant” means (i) any
employee with an annual base salary in excess of the amount specified by the
Committee, (ii) any Outside Director, and (iii) any other employees
designated as eligible by the Committee.


 


(q)           “Employee” means any employee of the Employer.


 


(r)            “Employer” means Coherent, Inc. and any
successors and assigns unless otherwise provided herein.


 


(s)           “Entry Date” means (i) January 1
(which is also the Entry Date for employees who are promoted or given a base
salary increase so as to become an Eligible Participant for the first time and
for re-hires who were previously Eligible Participants), (ii) for new
employees who are Eligible Participants (including re-hires who were not
previously Eligible Participants), the first day of the next payroll period
commencing after the next paydate following receipt of their deferral election
by the Company; provided, however, that such new employee’s deferral election
must be submitted no later than 30 days following their becoming newly
eligible, or (iii) for Non-Employee Directors who are Eligible
Participants for the first time, the first day of the next Company fiscal
quarter following their becoming a Non-Employee Director; provided, however,
that such new Non-Employee Director’s deferral election must be submitted no
later than 30 days following their becoming a newly eligible Non-Employee Director.


 


(t)            “ERISA” means the Employee Retirement Income
Security Act of 1974, as from time to time amended.


 


2

















 


(u)           “FICA Amount” means the aggregate Federal
Insurance Contributions Act (FICA) tax imposed on any Account under Code
Sections 3101, 3121(a) and 3121(v)(2), as applicable and any corresponding
tax withholding provisions of applicable state, local or foreign tax laws as a
result of the payment of the FICA amount.


 


(v)           “401(k) Plan”
means the Coherent, Inc. Employee Retirement and Investment Plan.


 


(w)          “Outside Director” means a member of the Board
whom is not an Employee.


 


(x)            “Participant” means any Employee or Outside
Director who participates in the Plan in accordance with Article 2 hereof.


 


(y)           “Plan” means this Coherent, Inc. 2005
Deferred Compensation Plan.


 


(z)            “Plan Year” means the 12-consecutive month
period beginning January 1 and ending December 31.


 


(aa)         “Prior Plans” means the Coherent, Inc.
1995 Deferred Compensation Plan, the Coherent, Inc. Supplementary
Retirement Plan and the Director Deferred Compensation Plan.


 


(bb)         “Retirement” means a Participant’s Separation
from Service after attaining 50 years of age.


 


(cc)         “Sales Commission”   means “sales commission compensation” as such
term is defined in Treasury Regulation §1.409A-2(a)(12)(i).


 


(dd)         “Separation From Service” means a separation
from service as defined under Code Section 409A.  For this purpose, the employment relationship
will be treated as continuing intact while the Participant is on military
leave, sick leave or other bona fide leave of absence, except that if the
period of such leave exceeds six (6) months and the Participant does not
retain a right to re-employment under an applicable statute or by contract,
then the employment relationship will be deemed to have terminated on the first
day immediately following such six-month period.  A leave of absence constitutes a bona fide
leave of absence only if there is a reasonable expectation that the Participant
will return to perform services for the Company.


 


(ee)         “Specified Employee” means a Participant who,
as of the date of his or her Separation from Service, is a key employee of the
Company.  For this purpose, a Participant
is a key employee if he or she meets the requirements of Code section
416(i)(1)(A)(i), (ii) or (iii) (disregarding Code section 416(i)(5)).  As of 2008, this generally includes (i) the
top fifty (50) Company officers with compensation greater than $150,000 per
year, (ii) a 5% owner of the Company, or (iii) a 1% owner of the
Company with compensation greater than $150,000 per year.  For purposes of the preceding sentence, “compensation”
means compensation as such term is defined in the 401(k) Plan for Code
section 415 purposes.  The determination
of who is a Specified Employee shall be made on December 31 of each year
and shall include any employee who qualified


 


3

















 


as a Specified Employee
at any time during the preceding twelve-month period.  Once so determined, the list of Specified
Employees shall be initially effective on the following April 1 and shall
remain effective for twelve months (i.e., through March 31 of the
following year).


 


(ff)           “Subsidiary” means a subsidiary of the
Employer, as such term is defined in Code section 424(f).


 


(gg)         “Trading Day” means a day upon which the major
U.S. national stock exchanges are open for trading.


 


(hh)         “Trust” means the trust fund established
pursuant to the terms of the Plan.


 


(ii)           “Trustee” means the corporation or individuals
named in the agreement establishing the Trust and such successor and/or
additional trustees as may be named in accordance with the Trust Agreement.


 


(jj)           “Unforeseeable Emergency” means (a) a
severe financial hardship to a Participant resulting from an illness or
accident of the Participant or his or her spouse, beneficiary or dependent (as
defined in section 152 of the Code, but without regard to subsections (b)(1),
(b)(2) and (d)(1)(B) thereof), (b) loss of the Participant’s
property due to casualty (including the need to rebuild a home following damage
to a home not otherwise covered by insurance, for example, not as a result of a
natural disaster), or (c) other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the
Participant.


 


(kk)         “Year of Service” means a period of 12
consecutive months during which the Participant is employed by the Employer or
serves as a Board member.  Service
commences on the date the Participant first commences service for the Employer
and ends on the date that the Participant quits, retires, is discharged, is
determined to be Totally Disabled or dies.


 


(ll)           “Valuation Date” means (i) for
re-allocations of amounts previously deferred, the date of re-allocation, or, if
that date is not a Trading Day, then the next Trading Day, (ii) for
distributions hereunder, the last day of the preceding month, or, if that day
is not a Trading Day, then the most recently concluded Trading Day,  and (iii) for allocations of deferrals, the next
Trading Day following the payday to which the deferral relates.


 


ARTICLE II


 


Participation


 


2.1           Date of Participation.  Each Eligible Participant shall be become a
Participant as of the Entry Date next following their timely filing of an
election to defer Compensation in accordance with Section 3.1.


 


2.2           Resumption of Participation Following Return to
Service.  If
a Participant ceases to be an Employee or Outside Director and thereafter
returns to the service of the Employer he or she


 


4

















 


will again become
a Participant as of the Entry Date following the date on which he or she
re-commences service with the Employer, provided he or she is an Eligible
Participant and has timely filed an election to defer Compensation pursuant to Section 3.1.  Any scheduled Plan payments the Participant
has been receiving shall continue to be paid as previously scheduled.


 


2.3           Change in Employment Status.  If any Employee Participant
continues in the employ of the Employer but ceases to be an Eligible
Participant, the individual shall continue to be a Participant until the entire
amount of his benefit is distributed; provided, however, the individual shall
not be entitled to make Deferral Contributions during subsequent Plan Years in
which he or she is not an Eligible Participant. 
In the event an Employee Participant ceases to be an Eligible
Participant, if such individual has not undergone a Separation From Service, he
or she shall continue to make Deferral Contributions under the Plan through the
end of the Plan Year in which he or she ceases to be an Eligible
Participant.  Thereafter, such individual
shall not make any further Compensation deferral contributions to the Plan
unless or until he or she again becomes an Eligible Participant.  In the event that the individual subsequently
again becomes an Eligible Participant, the individual may resume full
participation on the next Entry Date in accordance with Section 3.1.


 


ARTICLE
III


 


Contributions


 


3.1           Deferral Contributions.


 


(a)           Annual Open Enrollment.  Prior to the
beginning of each Plan Year, each Eligible Participant (including newly
eligible Eligible Participants who were formerly Eligible Participants) may
elect to execute a compensation reduction agreement with the Employer to reduce
his Compensation by a specified percentage not exceeding, (i) for Eligible
Employees, 75% of their base salary and 100% of their other Compensation, and (ii) for
Outside Directors, 100% of their Compensation, equal in either case to whole
number multiples of one (1) percent, and in a scheduled amount of not less
than $10,000.  Such agreement shall
become irrevocable as of the last day of the calendar year in which it is made
and shall be effective, with respect to Eligible Employees, with the first
payday in the following Plan Year and with respect to Outside Directors, with
the first day of service in the following Plan Year.  Except with respect to payroll periods that
cross-over from one calendar year to the next, the election shall not be
effective with respect to Compensation relating to services already
performed.  With respect to Compensation
that qualifies as a Sales Commission, the services relating to such
Compensation shall be deemed performed in the year in which the customer pays
the Company.  An election once made will
remain in effect for paydays falling in the duration of the Plan Year.  After the beginning of a Plan Year, a
Participant will not be permitted to change, terminate or revoke his or her
Compensation Deferral election for such Plan Year, except to the limited extent
provided in Section 3.4. Amounts credited to a Participant’s Account prior
to the effective date of any new election will not be affected and will be paid
in accordance with that prior election.


 


5

















 


(b)           Newly Eligible Participants. 
The same rules as in Section 3.1(a) above shall also
apply to individuals who become Eligible Participants for the first time,
except (i) such new Eligible Participants shall have no more than thirty
(30) days following their becoming eligible for the first time under the Plan
or any other non-qualified deferred compensation plans of the Employer required
to be aggregated with the Plan in which to elect to have their Compensation
reduced, and (ii) the agreement shall become effective, with respect to
Eligible Employees, with the first full payroll period commencing following the
receipt of their election by the Company and with respect to Outside Directors,
with the first day of service following the receipt of their election by the
Company.  Newly eligible Outside
Directors may not, however, defer quarterly fees payable on account of the
Company’s fiscal quarter in which the election is made.


 


(c)           Variable Compensation Plan, Sales Commission Plan and
Sales Incentive Bonuses Payable in a Subsequent Year. 
If a Variable Compensation Plan, Sales Commission Plan or Sales
Incentive Bonus (so long as such Sales Commission Plan and Sales Incentive
Bonus qualifies as Sales Commissions under Section 409A) is earned in one
calendar year and would normally be paid in the first quarter of the ensuing
calendar year, it shall be deferred and distributed based upon the election
made by the Eligible Participant in the open enrollment period in the year
prior to the year in which it was earned. 
For newly Eligible Participants, any such Variable Compensation Plan,
Sales Commission Plan or Sales Incentive Bonus shall be deferred and
distributed based upon their initial election made with respect to the year in
which it was earned (or the year in which it was paid to the Company, with
respect to Sales Commissions); provided, however, that such election may apply
to no more than the total amount of such compensation multiplied by the ratio
of the number of days remaining in the applicable performance period after such
election becomes irrevocable over the total number of days in the applicable
performance period.


 


EXAMPLE:  In the
December, 2005 open enrollment period, an Eligible Participant elects to defer
75% of her Sales Incentive Bonus for 2006. 
The 2006 Sales Incentive Bonus is normally paid in March, 2007.  The deferral and distribution of her 2006
Sales Incentive Bonus otherwise payable in March 2007 are controlled by
her election made in the 2005 open enrollment period.


 


(d)           Year-End Cross-Over Payroll Periods. 
Paydays relating to periods of service that cross-over the calendar year
end shall be covered by the Participant’s deferral election in effect for the
later year, consistently with the default rules under Treasury Regulation
§1.409A-2(a)(13).


 


(e)           Limitation on Deferral Changes. 
The dollar amount of any Plan deferrals shall not be reduced or
increased during any Plan Year by virtue of any Participant election to
increase, decrease or terminate his or her rate of deferral in any other
employee benefit plan, including the Company’s employee stock purchase plan;
except as permitted by Code Section 409A with respect to changes in
deferral elections under the Company’s 401(k) Employee Savings Plan and
Code section 125 flexible benefits plan (or as otherwise permitted under Code Section 409A).


 


3.2           Accounts.  The Employer shall credit an amount to the
Account maintained on behalf of the Participant corresponding to the amount of
said reduction.  Under no circumstances
may an election to defer Compensation be adopted retroactively.


 


6
















 


3.3           Company Contributions.


 


(a)           Discretionary Contributions. 
The Company may, in its sole discretion, make a contribution to a
Participant’s Account, subject to such vesting and distribution conditions and
limitations as the Company, in its sole discretion, shall impose.  To the extent such Company contributions do
not vest, corresponding debits will be made to a Participant’s Account,
including any earnings on such forfeited amounts.


 


(b)            Annual Contribution.  Until such
time as the Company determines otherwise, the Company shall make an annual
contribution on behalf of any Employee with a Plan Account who also makes a
deferral for a given year into the Employer’s 401(k) Plan.  The amount of the annual contribution shall
be a percentage of the Participant’s compensation, as such term is defined in Section 2.12
of the Employer’s 401(k) Plan, without regard to Section 2.12(b) thereof
(“401(k) Compensation”) equal to the annual matching contribution
percentage in effect, if any, on the last day of the year under the Employer’s
401(k) Plan (e.g., 4% for 2009), minus the maximum amount permitted to be
contributed to a participant’s account in the Employer’s 401(k) Plan as an
employer matching contribution, as limited by virtue of Code section
401(a)(17), for such year.  The annual
contribution shall be credited to the Participant’s Account in the calendar
year following the year in which the 401(k) Plan deferrals were made.


 


EXAMPLE:  In 2009,
Employee Favre defers part of his compensation into the Employer’s 401(k) Plan.  Employee Favre’s 2009 401(k) Compensation
is $300,000.  Because of the Code section
401(a)(17) limit, the Employer can only make a maximum matching contribution of
$9,800 into Employee Favre’s 401(k) Plan account in 2009 (the 2009 Code
section 401(a)(17) limit of $245,000 x 4%). 
Accordingly, Employee Favre receives a non-discretionary credit in the
Plan equal to $2,200 [(4% x $300,000) - $9,800] in 2010.  Employee Favre will receive this credit even
if the amount of the employer match into his 401(k) Plan account for 2009
is less than $9,800 by virtue of his deferring less than $9,800 into the 401(k) Plan
in 2009.


 


3.4                                 Cancellation of Elections Due to 401(k) Hardship
Withdrawal or Unforeseeable Emergency Distribution.


 


(a)           401(k) Hardship Withdrawal. 
A Participant’s deferral election shall be automatically cancelled in
the event the Participant obtains a hardship distribution from the Employer’s
401(k) Plan pursuant to Treasury Regulation §1.401(k)-1(d)(3).  The Participant, if still an Eligible Participant,
may re-enroll in the Plan in the next open enrollment period.


 


(b)           Unforeseeable Emergency Distribution. 
A Participant’s deferral election shall be automatically cancelled in
the event the Participant obtains an unforeseeable emergency distribution from
the Plan pursuant to Section 6.5 hereof. 
The Participant, if still an Eligible Participant, may re-enroll in the
Plan in the next open enrollment period.


 


7

















 


(c)           Special 2005 Elections.


 


(i)           In accordance with Internal Revenue Service Notice
2005-1, Q&A-21, Eligible Participants may make a deferral election with
respect to 2005 Compensation that has not been paid or become payable at the
time of election, and superseding their prior election, if any, with respect to
such Compensation, on or before March 15, 2005, or such earlier time as is
determined by the Administrator (or its designee) in its sole discretion.


 


(ii)          In accordance with Internal Revenue Service Notice
2005-1 and the proposed Treasury regulations promulgated under Code Section 409A,
and notwithstanding any contrary provision of the Plan, a Participant may elect
to rescind or reduce his or her 2005 Compensation deferral election made under Section 3.1
by filing a form specified by the Administrator (or its designee) with the
Administrator (or its designee) no later than December 31, 2005, or such
earlier time as is determined by the Administrator (or its designee), in its
sole discretion.  The amount subject to
such election shall be distributed to the Participant in a single lump sum
payment of cash (or its equivalent) in calendar year 2005 or, if later, the
Participant’s taxable year in which the amount becomes earned and vested.


 


ARTICLE IV


 


Participants’ Accounts


 


4.1           Individual Accounts.  The Administrator will establish and maintain
an Account for each Participant which will reflect Deferral Contributions
credited to the Account on behalf of the Participant with earnings, expenses,
gains and losses credited thereto, attributable to the investments made with
the amounts in the Participant’s Account. 
Participants will be furnished statements of their Account values at
least once each Plan Year.


 


4.2           Accounting for Distributions.  As of any date of a distribution
to a Participant or a Beneficiary hereunder, the distribution to the
Participant or to the Participant’s Beneficiary(ies) shall be charged to the
Participant’s Account.


 


4.3           Separate Accounts.  A separate account under the Plan shall
established and maintained to reflect the Account for each Participant with
subaccounts to show separately the earnings, expenses, gains and losses
credited or debited to that Account.


 


ARTICLE V


 


Investment of Contributions


 


5.1           Manner of Investment.  All amounts credited to the Accounts of Participants
shall be treated as though invested only in eligible investments selected by
the Employer.


 


8

















 


5.2           Investment Decisions.


 


(a)           Accounts shall be treated as invested as directed by
the Participant among the eligible investment alternatives selected by the
Employer.  Participants may change their
investment allocations as specified by the Committee.


 


(b)           All dividends, interest, gains and distributions of
any nature earned in respect of an investment alternative in which the Account
is treated as investing shall be credited to the Account in an amount equal to
the net increase or decrease in the net asset value of each investment option
since the preceding Valuation Date.


 


ARTICLE VI


 


Distributions


 


6.1           Certain Distributions to Participants and
Beneficiaries.


 


(a)           Earliest Distributions


 


(i)           Regular Participants.  Except as
permitted by the Plan and Code Section 409A in connection with a Change of
Control Event, a Corporate Dissolution, pursuant to a Bankruptcy Court
Approval, a conflicts of interest or ethics rule distribution under Section 6.12,
a FICA and related income tax distribution under Section 6.13, a state,
local or foreign tax distribution under Section 6.14, or a Code Section 409A
Distribution, in no event may the account of a Participant who is not a
Specified Employee be distributed earlier than (i) the Participant’s
Separation From Service, (ii) the Participant’s Disability, (iii) the
Participant’s death, (iv) a specified time under Section 6.6
hereunder, (v) a Change in Control, (vi) the occurrence of an
Unforeseeable Emergency, or (vii) as required to satisfy a Domestic
Relations Order.


 


(ii)          Specified Employee Participants. 
Except as permitted by the Plan and Code Section 409A in connection
with a Change of Control Event, a Corporate Dissolution, pursuant to a
Bankruptcy Court Approval, a conflicts of interest or ethics rules distribution
under Section 6.12, a FICA and related income tax distribution under Section 6.13,
a state, local or foreign tax distribution under Section 6.14, or a Code Section 409A
Distribution, in no event may a Specified Employee’s account be distributed
earlier than (i) six (6) months following the Specified Employee’s
Separation From Service (or if earlier, the Specified Employee’s death), (ii) the
Specified Employee’s Disability, (iii) the Specified Employee’s death, (iv) a
specified time under Section 6.6 hereunder, (v) a Change in Control, (vi) the
occurrence of an Unforeseeable Emergency, or (vii) as required to satisfy
a Domestic Relations Order.  In the event
a Specified Employee’s Plan distributions are delayed due to the six-month
delay requirement, the amounts otherwise payable to the Specified Employee
during such period of delay shall be paid on a date that is at least six months
and one day following Separation From Service, but no later than the end of the
calendar year in which such six month and one day period ends (or, if earlier,
within 60 days following the death of the Specified Employee).  The Participant’s other scheduled
distributions, if any, shall not be affected by the period of delay.


 


9

















 


(b)           Lump-Sum or Installment Payment Initial Elections Upon
Retirement or Disability.  At the same time their initial
elections for any Plan Year are made, Participants shall elect to have their
Compensation deferrals for that Plan Year paid out, either following their
Retirement or their Disability, in one of the following forms of payment:


 


(i)            Lump sum cash payment; or


 


(ii)           Two to fifteen substantially equal annual
installments.


 


In no event shall any
Plan payments be made more than sixteen (16) years following a Participant’s
Separation From Service.  Any payment
scheduled to be made more than sixteen (16) years following a Participant’s
Separation From Service shall be paid with the last scheduled payment with the
sixteen (16) year period.


 


(c)           Other Plan Payments.  All Plan
payments not specified in Section 6.1(b), except for certain scheduled
in-service withdrawals as specified in Section 6.6, shall be made in the
form of a lump-sum payment.


 


(d)           Installment Payments Treated as Single Payments. 
All installment payments under the Plan are considered a single payment
for purposes of complying with Code Section 409A.


 


6.2           Subsequent Election to Delay or Change Form of
Payment.


 


(i)           A Participant’s initial election to receive a
Retirement, Disability or in-service distribution may be delayed or the form of
payment changed by filing an election, in the form required by the
Administrator, at least one year in advance of the date upon which any
distribution would otherwise have been made pursuant to the prior
election.  Such election shall not be
effective for a period of one (1) year, and must delay the initial payment
by a period of at least five (5) years, but may not result in the initial
payment occurring more than then ten (10) years following Retirement or
Disability.  In the absence of such
timely filed election, the value of such Participant’s Account shall be
distributed in accordance with their previously timely filed Account election.


 


(ii)          Because Plan installment payments are considered a
single payment for purposes of Code Section 409A, a subsequent election
may accelerate the method of distribution. 
For example, if a Participant initially elected to receive Retirement or
Disability payments in five annual installments following her Separation From
Service, she could make a timely election to instead take a lump-sum
distribution five years following her Separation From Service.  Moreover, a subsequent election may change a
lump-sum distribution to an installment election, so long as, in either case,
the initial payment is delayed for a period of at least five (5) years,
the election is not effective for one (1) year and is made at least one (1) year
in advance of the date upon which the first distribution would have otherwise
been made.


 


(iii)         Because installment payments are treated as a single
payment, any subsequent election must apply to all of the installment
payments.  For example, if a Participant


 


10

















 


initially elected to
receive Retirement or Disability payments in five annual installments following
her Separation From Service, the Participant may not elect to defer the 1st, 2d, 3rd and 5th installments only, but must also defer the 4th installment.


 


6.3           Lump-Sum Distribution Timing.   
Except as elected otherwise for Plan Years prior to the 2009 Plan Year,
for Participants receiving a lump-sum distribution, the value of their Account
(or portion thereof specified in the Participant’s election) shall be paid in a
lump-sum cash payment in the first February following their Separation
From Service, or, for Specified Employees (or their estates or beneficiaries),
if later, at least six months and one day after the date upon which they incur
a Separation From Service, but no later than the end of the calendar year in
which such six month and one day period ends or, if earlier, upon their death.


 


6.4           Installment Amounts.  For purposes
of this Section 6, installment payments shall be determined by dividing
the value of the Participant’s Account at the time of such installment by the
number of payments remaining.  Except as
elected otherwise for Plan Years prior to the 2009 Plan Year, installment
payments other than in-service distributions shall commence in the next February following
the triggering distribution event, or, for Specified Employees undergoing a
Separation From Service triggering event, as soon as is practicable at least
six months and one day after the date upon which they incur a Separation From
Service, but no later than the end of the calendar year in which such six month
and one day period ends.  However, in no
event may installment payments be made over a period exceeding fourteen years
following the first installment, even if the payments are postponed pursuant to
an election made under Section 6.2 hereof. 
In-service distributions will commence in the February of the
specified year.


 


6.5           Unforeseeable Emergency Distributions.  With the consent of the
Administrator, a Participant may withdraw up to one hundred percent (100%) of
his or her Account as may be required to meet a sudden Unforeseeable Emergency
of the Participant.  Such distribution
may only be made if the amounts distributed with respect to an Unforeseeable
Emergency may not exceed the amounts necessary to satisfy such emergency plus
amounts necessary to pay taxes reasonably anticipated as a result of the
distribution, after taking into account the extent to which such hardship is or
may be relieved through reimbursement or compensation by insurance or otherwise
or by liquidation of the Participant’s assets (to the extent the liquidation of
such assets would not itself cause severe financial hardship).


 


6.6           Scheduled In-Service Distribution.  A Participant may elect, as
provided in his or her Participant deferral election, to receive one or more
scheduled in-service (i.e., commencing while employed by the Company, or, for
outside director Participants, while serving as a Board member) distributions
relating to the Plan Year to which the deferral election relates.  Such in-service distributions may only be
scheduled for years at least two full calendar years following the end of the
calendar year to which the deferrals relate. Participants may elect to receive
in-service distributions of deferrals in annual installments of up to five
years.


 


EXAMPLE:  In the December, 2005 open enrollment period,
an Eligible Participant elects to receive an in-service distribution of 50% of
her 2006 plan deferrals, plus earnings and losses thereon, in 2009.  This includes a variable compensation plan
bonus paid in 2007 but


 


11

















 


earned in 2006.  Because the scheduled
in-service distribution is at least two full calendar years following the end
of 2006 (the end of the year to which the deferrals relate), the election is
permissible.


 


Each scheduled in-service
distribution may only be postponed in accordance with Section 6.2
hereof.  In the event a Participant
incurs a Separation From Service prior to receiving the first scheduled
payment, then the scheduled in-service distribution election shall be without
further force and effect and the applicable Separation From Service
distribution provisions of the Plan and the Participant’s deferral election
shall control.  Similarly, in the event a
Participant incurs a Separation From Service after receiving the first
scheduled in-service distribution payment, and if the Separation From Service
is not pursuant to Retirement, Disability or death, then any scheduled future
installments of the in-service distribution election shall be without further
force and effect and the applicable Separation From Service distribution provisions
of the Plan and the Participant’s deferral election shall control.  If, however, a Participant incurs a
Separation From Service due to his or her Retirement, Disability or death after
receiving their first scheduled in-service distribution payment, then the
scheduled in-service distributions will be made according to their schedule and
will take precedence over the Participant’s other deferral elections; provided,
however, that the first scheduled payment following the Separation From Service
for a Specified Employee shall be paid on a date that is at least six months
and one day following Separation From Service, but no later than the end of the
calendar year in which such six month and one day period ends (or, if earlier,
upon the death of the Specified Employee).


 


6.7           Death.  Except with respect to certain in-service
distributions as provided below, if a Participant dies, his or her designated
Beneficiary or Beneficiaries will receive the balance of his or her Account in
a lump-sum.  Moreover, if such death occurs
prior to a Separation From Service, the Account shall vest 100% as to any
previously unvested Account balance. 
Distribution to the Beneficiary or Beneficiaries will be made as soon as
is practicable in the year following the year of death.


 


A Participant may
designate a Beneficiary or Beneficiaries, or change any prior designation of
Beneficiary or Beneficiaries by giving notice to the Administrator on a form
designated by the Administrator (spousal consent to such change may be required
on the form designated by the Administrator). 
If more than one person is designated as the Beneficiary, their
respective interests shall be as indicated on the designation form.


 


If upon the death of the
Participant there is, in the opinion of the Administrator, no designated
Beneficiary for part or all of the Participant’s Account, the amount as to
which there is no designated Beneficiary will be paid to his or her surviving
spouse or, if none, to his or her estate (such spouse or estate shall be deemed
to be the Beneficiary for purposes of the Plan).


 


12

















 


6.8           Notice to Trustee.  The Administrator will notify the Trustee in
writing whenever any Participant or Beneficiary is entitled to receive benefits
under the Plan.  The Administrator’s
notice shall indicate the form, amount and frequency of benefits that such
Participant or Beneficiary shall receive.


 


6.9           Time of Distribution.  In no event will distribution to a Participant
be made later than the date specified by the Participant in his or her election
to defer Compensation; provided, however, that if a Participant is a Specified
Employee, his or her election shall be subject to the six (6) month
distribution delay requirements of the Plan and Code Section 409A.


 


6.10         Limitation on Distributions to Covered Employees Prior
to a Change of Control.  Notwithstanding any other provision of this Article VI, in
the event that, prior to a Change of Control, the Participant is a “covered
employee” as that term is defined in Section 162(m)(3) of the Code,
or would be a covered employee if his or her Account were distributed in
accordance with his or her election, and the Administrator reasonably
anticipates that Participant’s scheduled Plan distributions would cause the Employer
to forego an income tax deduction with respect to such distribution by virtue
of Code Section 162(m), then such Participant’s distributions shall be
delayed until the earlier of (i) the earliest date at which the
Administrator reasonably anticipates that the Employer’s deduction related to
the distribution will not be limited by virtue of Code Section 162(m), or (ii) the
calendar year in which the Participant undergoes a Separation From Service,
subject to complying with any six (6) month distribution delay
requirements of this Plan and Code Section 409A.


 


6.11         Domestic Relations Order Distributions.  The Committee, in its sole
discretion, may accelerate a payment (or payments) make such payments to an
individual other than the Participant as necessary to comply with the terms of
a Domestic Relations Order.


 


6.12         Conflicts of Interest and Ethics Rules Distributions.  The Committee, in its sole
discretion, may accelerate a payment (or payments) as necessary (i) for
any U.S. federal officer or employee in the executive branch of the U.S.
federal government to comply with an ethics agreement with the U.S. federal
government, or (ii) to avoid violating a U.S. federal, state, local or
foreign ethics law or conflicts of interest law, as specified under Code Section 409A.


 


6.13         FICA and Related Income Tax Distribution.  The Committee, in its sole
discretion, may permit a distribution from a Participant’s Account sufficient
to pay any FICA Amounts due upon the vesting of any Company contribution as
well as to satisfy the income tax withholding requirements with respect to the
FICA Amount and income tax payments under this Section 6.13.  In no event may the total payment under this Section 6.13
exceed the aggregate of the FICA Amount and the related income tax withholding.


 


6.14         State, Local and Foreign Tax Distribution.  The Committee, in its sole
discretion, may permit a distribution from a Participant’s Account sufficient
to pay any state, local or foreign tax obligations arising from participation
in the Plan that apply to an amount deferred under the Plan prior to the
scheduled distribution of such amount. 
In the event the Committee exercises such discretion, the Committee may
also permit a distribution sufficient to pay related income tax


 


13

















 


withholding in
accordance with Code Section 409A. 
In no event may the total payment under this Section 6.14 exceed
the aggregate amount of such taxes due.


 


6.15         Code Section 409A Distribution.  In the event that the Plan fails
to satisfy the requirements of Code Section 409A, then the Committee, in
its sole discretion, may permit a distribution from a Participant’s Account up
to the maximum amount required to be included in income as a result of the
failure to comply with Code Section 409A.


 


6.16         Tax Withholding.  Payments under this Article VI shall be
subject to all applicable withholding requirements for state and federal income
taxes and to any other federal, state or local taxes that may be applicable to
such payments.


 


6.17         Special 2008 Election. 
Notwithstanding other Plan provisions, pursuant to and in accordance
with IRS Notice 2007-86, in the 2008 Plan Year, the Committee had the
discretion to permit Participants to change the time and form or payment of
Accounts with respect to amounts credited on and after January 1, 2005 so
long as the change did not (i) accelerate payment of amounts that would
otherwise be payable in a future year into the year of the new election, and (ii) apply
to amounts that would otherwise be paid in the year of the election.


 


ARTICLE VII


 


Change of Control


 


7.1           No New Participants Following Change of Control.  No individual may commence
participation in the Plan following a Change of Control Event.


 


7.2           Discretionary Termination and Accelerated Plan
Distributions 30 Days Prior to or Within 12 Months Following a Change in
Control. 
The Administrator, in its sole discretion, may terminate the Plan and
accelerate all scheduled Plan distributions within 30 days prior to or 12
months following a Change in Control Event by means of an irrevocable election;
provided that such termination and distribution acceleration complies with the
requirements of Code Section 409A.


 


ARTICLE VIII


 


Termination Due to Corporate
Dissolution or Pursuant to Bankruptcy Court Approval


 


8.1           Corporate Dissolution.  The Administrator, in its sole discretion, may
terminate the Plan and accelerate all scheduled Plan distributions within 12
months following a Corporate Dissolution; provided that such termination and
distribution acceleration complies with the requirements of Code Section 409A.


 


14
















 


8.2           Bankruptcy Court Approval.  The Administrator, in its sole
discretion, may terminate the Plan and accelerate all scheduled Plan
distributions pursuant to Bankruptcy Court Approval; provided that such
termination and distribution acceleration complies with the requirements of
Code Section 409A.


 


ARTICLE IX


 


Amendment and Termination


 


9.1           Amendment by Employer.  The Employer reserves the authority to amend
the Plan.  Any such change
notwithstanding, no Participant’s Account shall be reduced by such change below
the amount to which the Participant would have been entitled if he had
voluntarily left the employ of the Employer immediately prior to the date of
the change.  The Employer may from time
to time make any amendment to the Plan that may be necessary to satisfy Code Section 409A
or ERISA.


 


9.2           Retroactive Amendments.  An amendment made by the Employer in
accordance with Section 9.1 may be made effective on a date prior to the
first day of the Plan Year in which it is adopted if such amendment is necessary
or appropriate to enable the Plan and Trust to satisfy the applicable
requirements of Code Section 409A or ERISA or to conform the Plan to any
change in federal law or to any regulations or rulings thereunder, so long as
such retroactive amendment is permitted by applicable law.


 


9.3           Plan Deferral Termination.  The Employer has adopted the Plan
with the intention and expectation that deferrals will be permitted
indefinitely.  However, the Employer has
no obligation to maintain the Plan for any length of time and may discontinue
future Compensation deferrals under the Plan in advance of any Plan Year by
written notice delivered to Eligible Participants without any liability for any
such discontinuance.


 


9.4           Distribution upon Certain Plan Terminations.  Upon termination of the Plan
other than pursuant to a Change of Control Event, Corporate Dissolution or
pursuant to a Bankruptcy Court Approval, no further Deferral Contributions or
Employer Contributions shall be made under the Plan, but Accounts of Participants
maintained under the Plan at the time of termination shall continue to be
governed by the terms of the Plan until paid out in accordance with the terms
of the Plan, Participants’ deferral elections and the requirements of Code Section 409A,
which latter shall take precedence over the terms of the Plan and Participants’
deferral elections in the event of any conflict.


 


ARTICLE
X


 


The
Trust


 


10.1         Establishment of Trust.  The Employer shall establish the Trust between
the Employer and the Trustee, in accordance with the terms and conditions as
set forth in a separate agreement, under which assets are held, administered
and managed, subject to the claims of the Employer’s creditors in the event of
the Employer’s insolvency, until paid to Participants and their


 


15

















 


Beneficiaries as
specified in the Plan.  The Trust is
intended to be treated as a grantor trust under the Code, and the establishment
of the Trust is not intended to cause Participants to realize current income on
amounts contributed thereto.


 


ARTICLE XI


 


Miscellaneous


 


11.1         Limitation of Rights.  Neither the establishment of the Plan and the
Trust, nor any amendment thereof, nor the creation of any fund or account, nor
the payment of any benefits, will be construed as giving to any Participant or
other person any legal or equitable right against the Employer, Administrator
or Trustee, except as provided herein; and in no event will the terms of
employment or service of any Participant be modified or in any way affected
hereby


 


11.2         Nontransferability; Domestic Relations Orders.  The right of any Participant, any
Beneficiary, or any other person to the payment of any benefits under this Plan
shall not be assigned, transferred, pledged or encumbered; provided, however,
that a Deferral Account hereunder may be transferred to a Participant’s former
spouse pursuant to a Domestic Relations Order.


 


11.3         Facility of Payment.  In the event the Administrator determines, on
the basis of medical reports or other evidence satisfactory to the
Administrator, that the recipient of any benefit payments under the Plan is
incapable of handling his affairs by reason of minority, illness, infirmity or
other incapacity, the Administrator may direct the Trustee to disburse such
payments to a person or institution designated by a court which has
jurisdiction over such recipient or a person or institution otherwise having
the legal authority under State law for the care and control of such recipient.  The receipt by such person or institution of
any such payments therefore, and any such payment to the extent thereof, shall
discharge the liability of the Trust for the payment of benefits hereunder to
such recipient.


 


11.4         Information between Employer and Trustee.  The Employer agrees to furnish
the Trustee, and the Trustee agrees to furnish the Employer with such
information relating to the Plan and Trust as may be required by the other in
order to carry out their respective duties hereunder, including without
limitation information required under the Code or ERISA and any regulations
issued or forms adopted thereunder.


 


11.5         Notices.  Any notice or other communication in
connection with this Plan shall be deemed delivered in writing if addressed as
provided below and if either actually delivered at said address or, in the case
of a letter, three business days shall have elapsed after the same shall have
been deposited in the United States mails, first-class postage prepaid and
registered or certified:


 


(a)           If it is sent to the Employer or Administrator, it
will be at the address specified by the Employer;


 


16

















 


(b)           If it is sent to the Trustee, it will be sent to the
address set forth in the Trust Agreement; or, in each case at such other
address as the addressee shall have specified by written notice delivered in
accordance with the foregoing to the addressor’s then effective notice address.


 


11.6         Governing Law.  The Plan will be construed, administered and
enforced according to ERISA, and to the extent not preempted thereby, the laws
of the state of California.


 


11.7         No Guarantees Regarding Tax Treatment; Disclaimer. 
Participants (or their Beneficiaries) will be completely responsible for
all taxes with respect to any benefits under the Plan.  The Administrator, the Board of Directors and
the Employer make no guarantees regarding the tax treatment to any person of
any deferrals or payments made under the Plan. 
The Plan is intended to comply with the provisions of Code Section 409A.  Neither the Employer nor
any of their employees shall have any liability to any Participant should the
Plan or its administration fail to comply with Code Section 409A.


 


ARTICLE XII


 


Plan Administration


 


12.1         Powers and responsibilities of the Administrator.  The Administrator has the full
power and the full responsibility to administer the Plan in all of its details,
subject, however, to the applicable requirements of ERISA.  The Administrator’s powers and
responsibilities include, but are not limited to, the following:


 


(a)           To make and enforce such rules and regulations as
it deems necessary or proper for the efficient administration of the Plan;


 


(b)           The discretionary authority to construe and interpret
the Plan, its interpretation thereof in good faith to be final and conclusive
on all persons claiming benefits under the Plan;


 


(c)           To decide all questions concerning the Plan and the
eligibility of any person to participate in the Plan;


 


(d)           To administer the claims and review procedures
specified in Section 12.3;


 


(e)           To compute the amount of benefits which will be
payable to any Participant, former Participant or Beneficiary in accordance
with the provisions of the Plan;


 


(f)            To determine the person or persons to whom such
benefits will be paid;


 


(g)           To authorize the payment of benefits;


 


(h)           To appoint such agents, counsel, accountants, and
consultants as may be required to assist in administering the Plan;


 


17

















 


(i)            By written instrument, to allocate and delegate its
responsibilities.


 


12.2         Nondiscriminatory Exercise of Authority.  Whenever, in the administration
of the Plan, any discretionary action by the Administrator is required, the
Administrator shall exercise its authority in a nondiscriminatory manner so
that all persons similarly situated will receive substantially the same
treatment.


 


12.3         Claims and Review Procedures.


 


(a)           Purpose.  Every
Participant or Beneficiary (or his or her representative who is authorized in
writing by the Claimant to act on his or her behalf) (hereinafter collectively,
“Claimant”) shall be entitled to file with the Administrator (and subsequently
with the individual(s) designated to review claims appealed after being
initially denied by the Administrator (the “Review Panel”)) a written claim for
benefits under the Plan.  The
Administrator and Review Panel shall each be able to establish such rules,
policies and procedures, consistent with ERISA and the Plan, as it may deem
necessary or appropriate in carrying out its duties and responsibilities under
this Section 12.3.  In the case of a
denial of the claim, the Administrator or Review Panel, as applicable, shall
provide the Claimant with a written or electronic notification that complies
with Department of Labor Regulation Section 2520.104b-1(c)(1).


 


(b)           Denial of Claim.  If a claim is
denied by the Administrator (or its authorized representative), in whole or in
part, then the Claimant shall be furnished with a denial notice that shall
contain the following:


 


(i)          specific reason(s) for the denial;


 


(ii)         reference to the specific Plan provision(s) on
which the denial is based;


 


(iii)        a description of any additional material or
information necessary for the Claimant to perfect the claim, and an explanation
of why the material or information is necessary; and


 


(iv)       an explanation of the Plan’s claims review procedure
and the time limits applicable to such procedures, including a statement of the
Claimant’s right to bring a civil action under ERISA Section 502(a) following
a denial on review (as set forth in Section 12.4 below).


 


The denial notice
shall be furnished to the Claimant no later than ninety (90)-days after receipt
of the claim by the Administrator, unless the Administrator determines that
special circumstances require an extension of time for processing the
claim.  If the Administrator determines
that an extension of time for processing is required, then notice of the
extension shall be furnished to the Claimant prior to the termination of the
initial ninety (90)-day period.  In no
event shall such extension exceed a period of ninety (90)-days from the end of
such initial period.  The extension
notice shall indicate the special circumstances requiring an extension of time
and the date by which the Plan expects to render the benefits determination.


 


18

















 


(c)           Claim Review Procedure.  The Claimant
may request review of the denial at any time within sixty (60) days following
the date the Claimant received notice of the denial of his or her claim.  The Administrator shall afford the Claimant a
full and fair review of the decision denying the claim and, if so requested,
shall:


 


(i)           provide the Claimant with the opportunity to submit
written comments, documents, records and other information relating to the
claim for benefits;


 


(ii)          provide that the Claimant shall be provided, upon
request and free of charge, reasonable access to, and copies of, all documents,
records and other information (other than documents, records and other information
that is legally-privileged) relevant to the Claimant’s claim for benefits; and


 


(iii)         provide for a review that takes into account all
comments, documents, records and other information submitted by the Claimant
relating to the claim, without regard to whether such information was submitted
or considered in the initial benefit determination.


 


(d)           If the claim is subsequently also denied by the Review
Panel, in whole or in part, then the Claimant shall be furnished with a denial
notice that shall contain the following:


 


(i)           specific reason(s) for the denial;


 


(ii)          reference to the specific Plan provision(s) on
which the denial is based; and


 


(iii)         an explanation of the Plan’s claims review procedure
and the time limits applicable to such procedures, including a statement of the
Claimant’s right to bring a civil action under ERISA Section 502(a) following
the denial on review.


 


(e)           The decision on review shall be issued within sixty
(60) days following receipt of the request for review.  The period for decision may, however, be
extended up to one hundred twenty (120) days after such receipt if the Review
Panel determines that special circumstances require extension.  In the case of an extension, notice of the
extension shall be furnished to the Claimant prior to the expiration of the
initial sixty (60)-day period.  In no
event shall such extension exceed a period of sixty (60) days from the end of
such initial period.  The extension
notice shall indicate the special circumstances requiring an extension of time
and the date by which the Plan expects to render the benefits determination.


 


(f)            Special Procedure for Claims Due to Disability. 
To the extent an application for distribution  as a result of a Disability
requires the Administrator or the Review Panel, as applicable, to make a
determination of Disability under the terms of the Plan, then such
determination shall be subject to all of the general rules described in
this Article, except as they are expressly modified by this Section.


 


19

















 


(i)         The initial decision on the claim for a Disability
distribution will be made within forty-five (45) days after the Plan receives
the Claimant’s claim, unless special circumstances require additional time, in
which case the Administrator will notify the Claimant before the end of the
initial forty-five (45)-day period of an extension of up to thirty (30)
days.  If necessary, the Administrator
may notify the Claimant, prior to the end of the initial thirty (30)-day
extension period, of a second extension of up to thirty (30) days.  If an extension is due to the Claimant’s
failure to supply the necessary information, then the notice of extension will
describe the additional information and the Claimant will have forty-five (45)
days to provide the additional information. 
Moreover, the period for making the determination will be delayed from
the date the notification of extension was sent out until the Claimant responds
to the request for additional information. 
No additional extensions may be made, except with the Claimant’s
voluntary consent.  The contents of the
notice shall be the same as described in Section 13.3(b) above.  If a disability distribution claim is denied
in whole or in part, then the Claimant will receive notification, as described
in Section 13.3(b).


 


(g)           If an internal rule, guideline, protocol or similar
criterion is relied upon in making the adverse determination, then the denial
notice to the Claimant will either set forth the internal rule, guideline, protocol
or similar criterion, or will state that such was relied upon and will be
provided free of charge to the Claimant upon request (to the extent not
legally-privileged) and if the Claimant’s claim was denied based on a medical
necessity or experimental treatment or similar exclusion or limit, then the
Claimant will be provided a statement either explaining the decision or
indicating that an explanation will be provided to the Claimant free of charge
upon request.


 


(h)           Any Claimant whose application for a Disability
distribution is denied in whole or in part, may appeal the denial by submitting
to the Review Panel a request for a review of the application within one
hundred and eighty (180) days after receiving notice of the denial.  The request for review shall be in the form
and manner prescribed by the Review Panel. 
In the event of such an appeal for review, the provisions of Section 13.3(c) regarding
the Claimant’s rights and responsibilities shall apply.  Upon request, the Review Panel will identify any
medical or vocational expert whose advice was obtained on behalf of the Review
Panel in connection with the denial, without regard to whether the advice was
relied upon in making the determination. 
The entity or individual appointed by the Review Panel to review the
claim will consider the appeal de novo, without any deference to the
initial denial.  The review will not
include any person who participated in the initial denial or who is the
subordinate of a person who participated in the initial denial.


 


(i)            If the initial Disability distribution denial was
based in whole or in part on a medical judgment, then the Review Panel will
consult with a health care professional who has appropriate training and
experience in the field of medicine involved in the medical judgment, and who
was neither consulted in connection with the initial determination nor is the
subordinate of any person who was consulted in connection with that
determination; and upon notifying the Claimant of an adverse determination on
review, include in the notice either an explanation of the clinical basis for
the determination, applying the terms of the Plan to the Claimant’s medical
circumstances, or a statement that such explanation will be provided free of
charge upon request.


 


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(j)            A decision on review shall be made promptly, but not
later than forty-five (45) days after receipt of a request for review, unless
special circumstances require an extension of time for processing.  If an extension is required, the Claimant
will be notified before the end of the initial forty-five (45)-day period that
an extension of time is required and the anticipated date that the review will
be completed.  A decision will be given
as soon as possible, but not later than ninety (90) days after receipt of a
request for review.  The Review Panel
shall give notice of its decision to the Claimant; such notice shall comply
with the requirements set forth in paragraph (h) above.  In addition, if the Claimant’s claim was
denied based on a medical necessity or experimental treatment or similar
exclusion, then the Claimant will be provided a statement explaining the
decision, or a statement providing that such explanation will be furnished to
the Claimant free of charge upon request. 
The notice shall also contain the following statement:  “You and your Plan may have other voluntary
alternative dispute resolution options, such as mediation.  One way to find out what may be available is
to contact your local U.S. Department of Labor Office and your State insurance
regulatory agency.”


 


12.4         Exhaustion of Claims Procedure and Right
to Bring Legal Claim. 
No action in law or equity shall be brought more than one (1) year after
the Review Panel’s affirmation of a denial of the claim, or, if earlier, more
than four (4) years after the facts or events giving rise to the Claimant’s
allegation(s) or claim(s) first occurred.


 


12.5         Plan’s Administrative Costs.  The Employer shall pay all
reasonable costs and expenses (including legal, accounting, and employee
communication fees) incurred by the Administrator and the Trustee in
administering the Plan and Trust.


 


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IN WITNESS WHEREOF, the
Employer by its duly authorized officer(s), has caused this Plan to be adopted
initially effective January 1, 2005, and amended and restated as of November 14,
2006, November 20, 2008 and November 20, 2009.


 


	
   

  	
  COHERENT,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  



 


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